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Trade is Good for Competition, but Competition is Great for Trade

CPI Antitrust Chronicle March 2013 (3), Forthcoming

6 Pages Posted: 21 Feb 2013 Last revised: 6 Jul 2016

Seth B. Sacher

Federal Trade Commission

Date Written: February 19, 2013

Abstract

It may seem obvious that good trade policy can promote competition. That is, by opening up a domestic economy to increased trade, additional competitive pressures may be placed on domestic producers, thereby decreasing domestic market power and improving industry performance in the form of lower prices, production that is more efficient and more innovation.

On the other hand, although it may appear less obvious, good competition policy can be a means for fostering good trade policies. A competitive domestic economy, as enhanced by appropriate competition policies, can be a good defense against protectionist sentiments. In other words, robust competition enhances domestic prosperity and international competitiveness, which are conducive to political conditions supportive (or at least less obstructive) of freer trade. Indeed, this note argues that the benefits of good trade policy for good competition policy may be overemphasized, while the benefits of good competition policy for good trade policy may not be fully appreciated.

Keywords: antitrust, international trade, competition law, market power, abuse of dominance

JEL Classification: L10, L40, K21, F10, F19

Suggested Citation

Sacher, Seth B., Trade is Good for Competition, but Competition is Great for Trade (February 19, 2013). CPI Antitrust Chronicle March 2013 (3), Forthcoming. Available at SSRN: https://ssrn.com/abstract=2220726 or http://dx.doi.org/10.2139/ssrn.2220726

Seth B. Sacher (Contact Author)

Federal Trade Commission ( email )

600 Pennsylvania Ave., NW
Washington, DC 20580
United States

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